Brief on the Proposed Borrowers and Depositors Protection Act

Publisher:  National Anti-Poverty Organization, Canada
Year Published:  1977  
Pages:  23pp  
Resource Type:  Article
Cx Number:  CX336

Abstract:  This brief was presented to the House of Commons Committee on Health, Welfare and Social Affairs regarding Bill C-16 -- The Borrowers and Depositors Protection Act. It expresses a concern that, if the proposed legislation is passed it will leave low income consumers without the present protection under the existing Small Loans Act. The paper supports the principal intent of Bill C-16 to bring all enterprise dealing in credit under one law but the protection offered by the new bill is judged as being more theoretical than real. Problems identified are: the inadequate legal aid system to assist borrowers to initiate court action in seeking redress against a lender, insufficient education to assist people in recognising problems or abuses of the new law, the use of provincial superior court or county court instead of small claims court will make it more difficult to take action, the legislation doesn't prevent a lender from blacklisting a person who stops payment on a loan as a form of legal action.
The common basic problem faced by the poor is identified as inadequate income to meet basic needs with the side effect that it costs more to maintain a poor family. In the case of credit, it is either denied the poor, or it is granted at a higher cost on the basis that their income is too low to be able to repay a loan based on a general formula used by the lending institution. This discrimination it is felt, could be overcome by requiring banks to have a certain amount of their money available for lending as high risk loans.

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